St Matthew's warning that 'unto everyone that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away' is the biblical quote least likely to stir the Labour soul.

That the rich get richer and the poor will get poorer is not a policy prescription that appeals to the left. With the best of intentions, however, Labour is imposing the Gospel according to St Matthew on England's universities and is providing a parable on the state of the nation in the process.

Few dispute that academia needs reforming. Britain has a university system in which the last measure the government uses to judge the quality of academics is their ability to teach. Instead, tortuous bureaucracies assess the merits of the research produced by every department in all the 200 universities. On their ruling rests the disposal of £5bn of public money.

The 2008 fight for loot is under way. Luckless workers at a Bristol warehouse are sending 200,000 scholarly books and papers to the 1,000 or so professors who adjudicate on 70 panels like the judges of beauty contests.

In the inaugural issue of the new magazine Standpoint, Jonathan Bate of Warwick University despairs of the absurdity of the enterprise. He explains that panels filled with professors of foreign languages have been more generous in rating the work of their peers than professors of English. Officially, our universities are now world leaders in the study of French literature but awful at studying English literature. What's really happened, says Bate, is that while other professors of literature covered each other's backs and looked after each other's departments 'the Eng lit lot couldn't resist biting each other's backs' even if it meant their subject lost money.

Neither he nor the government says this, but a second failing of the system is that it creates conformism in supposedly independent minds. There are many honourable exceptions, but as a herd, academics are the most predictable of beasts. If I sit down with builders, dentists or accountants, I have no way of knowing what their opinions will be. Within seconds of talking to an academic, I guess their views on every major political issue.

Why should I be surprised? To get the academic papers published the judging panels demand, lecturers must engage in the soul-destroying task of sucking up to the editors of learned journals. The funding for their departments and their very livelihoods depend on their ability to please. The government does not ask researchers to produce work of intellectual distinction, however long it takes. They must loyally churn out enough papers to allow their department to claim a slice of the booty.

The government admits this can't go on. It plans to replace the judging panels with a computer, which will record the number of times an academic's name is mentioned by his colleagues. The theory is that the best academics receive the greatest number of acknowledgements in footnotes. Let a database identify who these oft-cited professors are and - bingo! - you have found the finest minds of your generation.

Ministers possibly realised that under the present funding arrangements, Cambridge University would have to sack Ludwig Wittgenstein. He might have been a genius, but it took him decades to produce a book. Under their new system, the thousands of academics who quoted his work would provide a true assessment of Wittgenstein's worth and spare him the dole.

It sounds fair until you remember St Matthew. In 1968, Robert K Merton of Columbia University coined the phrase 'the Matthew effect' when he looked at how scientists valued each other. He found that the already eminent got disproportionate credit for their work while unknowns, whose research was often as valuable, struggled for recognition.

The great English geneticist JBS Haldane illustrated Merton's argument with the story of an Indian student, SK Roy, who had found a way to improve strains of rice. 'I thought it was a rather ill-planned experiment,' Haldane admitted, 'but I let him go ahead on the general principle that I am not omniscient.' The experiment was a triumph. Haldane said that Roy deserved 95 per cent of the credit, but would never get it. 'Every effort will be made here to crab his work. He has not got a PhD or even a first-class MSc. So either the research is no good or I did it.'

Beyond the prestige of quoting established names lies the incentive to cheat - academics are already promising that 'if you cite my research I'll cite yours' - and beyond that lies sheer luck. Nassim Nicholas Taleb, who glories in the title of professor in the sciences of uncertainty, points out that what leads to one academic being cited rather than another can be a simple fluke. But as soon as he or she is cited in one paper, the odds increase that he or she will be cited in another.

The Matthew effect does not only work in academia. Of the thousands of first novels each year, the few that are reviewed make the literary pages because the author is already well known in another field (prestige), the author is a friend of the literary editor (cheating) or the author's book was picked at random from a pile on a slow week (luck).

City firms give lavish bonuses because they don't want to lose staff to rivals (prestige), because they dealt on insider information (cheating) or because they pulled out of the sub-prime market just in time (luck).

You only have to read the financial press to know that the beneficiaries of the property crash won't be first-time buyers - they are struggling to get mortgages because of the credit crunch. The winners will be the already rich sitting on piles of cash who will snap up assets when their prices hit the floor.

Labour should not be happy with helping those that hath. If it wants to reform education, it should begin by noticing that working-class students are dropping out and middle-class students are paying fees for substandard courses, because the first concern of the universities isn't teaching. Ministers would do better to redirect public money to make sure that it is.